The spin-offs from two major defence industry contracts and extra confidence in the resources and health sectors have triggered a fall in office vacancy rates in Adelaide to 14.7 per cent from 15.4 per cent six months ago, with demand for premium office space accelerating.

He said robust inquiries have been received over the past few months from defence firms and related service companies. Big players, including BAE Systems, Lockheed Martin and Raytheon, had been among them. Britain's BAE Systems in June won a $35 billion contract to build nine frigates for the navy in Adelaide, while French firm Naval Group is building the next generation of submarines after securing a $50 billion contract.

Mr Bahr said the resources sector was also showing increased activity, while the health sector and associated biomedical research had been a strong performer, and this flowed onto extra demand from the information technology industry.

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Tom Budarick, JLL's South Australian head of office leasing, said he expected to see some moderate rental growth over the next 12 months and improved growth in net effective rents in the medium-term as incentives began to be wound back.

"The market is heading in the right direction," Mr Budarick said. He said headline vacancy rates declined to 15.1 per cent in the second quarter of 2018 which was the lowest recorded level in almost four years.

He said tenant inquiry remained positive in the second quarter even though an extra 5000 square metres of sub-lease space from oil and gas group Santos had hit the market. Santos spurned a $14.4 billion takeover bid from US group Harbour Energy in May, but has been aggressively cutting its workforce for two years.

Property Council South Australian executive director Daniel Gannon said vacancies in the premium office sector showed a flight to quality was occurring, with premium vacancy rates falling to 2.8 per cent from 9.3 per cent in January. But vacancy rates in other segments had stayed in "double-digit territory".

In late 2019, BHP will shift its 600-strong workforce from an office building in nearby Grenfell Street to the new 19-floor, $250 million GPO Exchange building on Franklin Street which is being constructed by Charter Hall. BHP has naming rights on the building and is taking 10,000 sq m, encompassing the eight lowest floors.

The South Australian Attorney-General's department will take nine upper floors, comprising about 12,000 sq m. BHP employs about 3500 people in South Australia, most of them at the Olympic Dam copper mine about 560 kilometres north of Adelaide. BHP is crunching the numbers on a potential $2.7 billion expansion of that mine.